Most people dream of retirement or, at the very least, a time when all their hard work will reap rewards. It's safe to say at some point independent ATM deployers (IAD) will retire, sell or leave the business for one reason or another. Operating a fleet of ATMs can be an extremely lucrative business, however decreasing interchange rates as well as increasing costs and regulatory burdens have many IAD feeling like they are working harder to earn less. Couple this with ATM saturation and rapidly changing technology and it’s no wonder some IADs are wondering if now may be the time to sell their portfolio. Challenges Facing IADs Decreasing interchange rates have had a detrimental effect on many IADs – so much so that industry surveys have reported this issue as a major concern for several years running. ATM deployers are consistently looking for ways to counteract declining rates have caused. One factor effecting the industry is increased costs – hardware, software, labor….and fraud. If regular software updates and new government mandates like ADA were not enough, now IADs must upgrade aging ATMs to be EMV compliant by October 2016 to not be liable for counterfeit fraud costs on MasterCard transactions. Those failing to upgrade by October 2017 will absorb the risk from Visa as well. The question for many IADs is whether EMV liability shifts are the worst of the required responses to increasing fraud, or just the tip of the iceberg.

The mobile payment revolution is changing the way individuals and organizations conduct business. Given bitcoin’s ability to facilitate mobile transactions, it makes sense for the two movements – bitcoin and mobile payments – to work in tandem. Hence, bitcoin and digital payments will take center stage at the ATM & Mobile Innovation Summit, Sept. 9 to 11 at the Capitol Hilton in Washington, D.C. The summit is designed for banking, ATM and payments executives and is hosted by the Electronic Funds Transfer Association, ATM Marketplace and MobilePaymentsToday. Michael J. Casey, the author of “The Age of Cryptocurrency,” will be a keynote speaker. He is a senior columnist covering global finance at The Wall Street Journal. The event rate is $269 per night. Sponsorship opportunities are available for organizations that provide services to the financial services industry. Sponsors include the ATM Industry Association (ATMIA), MasterCard, Fujitsu and FIS, the Jacksonville, Fla.-based payment technology provider. Special workshop on bitcoin/ATM/compliance The first presentation on Sept. 9 from 2 to 4:30 p.m. will explore recent developments in bitcoin, ATM and mobile compliance. There is a separate $395 fee for this workshop. Panelists for this presentation include Kathleen Scott, Andrew Beal and Jack Milford Ford. Scott, senior counsel at Norton Rose Fulbright, advises foreign and domestic banks on federal and state regulatory issues. 

This short article is addressed to today’s senior business owners who have been around the block more times than they can count. I have been around that block as well. I know what is weighing on your mind. I know many of the thoughts going through your head, which you have discussed at meetings with your staff or your partners (if you have any). What is the next step, the next ‘Path’ to take regarding your business? You are not alone. You are not the first nor the last to analyze, think about, worry about, contemplate, ponder and just freeze, not sure what to do next. Most of you chose an initial ‘Path’ to start a business years ago, possibly out of your garage, your car, and possibly through an LLC or a corporation or not. Your focus was not to spend money on legal to create a business. No, your focus, your time, all your energy and money was devoted to get the business, whatever it may be, up and running. First priority was to start generating revenue, however you could, to cover expenses. Hopefully, as soon as possible thereafter, your second priority was to make more than enough money at the end of the day, the week, the month to cover more than just expenses. After that, you were off to the races. One does nothing, just continues to run the business as is, standing still, resulting in the business slowing down, contracting, and eventually sliding backwards, potentially losing revenue and valuation, until the business closes or it goes bankrupt. Path C. One sells: the entity (the company, business, and all of its assets are acquired by a buyer) “Entity Sale” or only the business’ assets (the legal entity structure, minus assets, are not acquired by a buyer) “Asset Sale”. A good deal of my legal career has been spent counseling business Clients with regard to taking the Third Path C. The Third Path C., either Entity Sell or Asset Sell, involves many steps that are typical for either type of transaction. However, there are significantly more issues to be considered in an Entity Sell versus an Asset Sale. I believe on a continuing, ongoing basis, there will always be companies marketing to buy, looking for, asking prospective business owners are you ready to retire, ready to exit, ready to sell. These buying companies are “Acquirers”. This is one way how Acquirers grow their respective company/business. Typically at most business conferences I have attended over the past several years, similar to the last ATM conference held this past September, such Acquirers were looking to engage parties, like you, inquiring ‘are you ready to retire, ready to exit, ready to sell’. If you are a business owner who has been around the blockI know. I have represented many, many business Clients in the course of my career, who when they first called me after their businesses took off, they handed me their business records (which might be a stretch to call them that) in the proverbial shoe box. After they (you) started growing their businesses, their focus, their priorities evolved, just as yours have. Typically at this juncture, the building of a larger company business base takes place. Contracts, deals, transactions, regulations, risk mitigation, litigation, etc., arise and become more complex. If you had not already hired an attorney at this point in time, many of you decided to do so. Again, I know, as typically this is when the second wave of new business Clients retain my legal services. However, many did not. Regardless of whatever you did, you not only survived, but your company thrived. And now here you are, years later, after your initial Path. You have built a mature company and business, which has been good for you. But what are you going to do next? What is the next step, the next ‘Path’ you are considering to take regarding your company, your business, yourself? It varies from business owner to owner, but as I stated at the beginning, this article is addressed to senior business owners. To simplify things, based on my experience in counseling successful, mature business Clients, I advise my Clients there are three Paths one typically travels. First Path - One begins/starts a business. You have done that! Second Path - One builds/grows the business into a successful company that is generating a net profit and has a good/great valuation. You have done that! Third Path - One transfers/divests, lose ownership or sells the business. This Path evolves into a “Tripartite” Path. Path A. One transfers ownership of the business to family member(s) and steps aside, retires. Path B. One does nothing, just continues to run the business as is, standing still, resulting in the business slowing down, contracting, and eventually sliding backwards, potentially losing revenue and valuation, until the business closes or it goes bankrupt. Path C. One sells: the entity (the company, business, and all of its assets are acquired by a buyer) “Entity Sale” or only the business’ assets (the legal entity structure, minus assets, are not acquired by a buyer) “Asset Sale”. A good deal of my legal career has been spent counseling business Clients with regard to taking the Third Path C. The Third Path C., either Entity Sell or Asset Sell, involves many steps that are typical for either type of transaction. However, there are significantly more issues to be considered in an Entity Sell versus an Asset Sale. I believe on a continuing, ongoing basis, there will always be companies marketing to buy, looking for, asking prospective business owners are you ready to retire, ready to exit, ready to sell. These buying companies are “Acquirers”. This is one way how Acquirers grow their respective company/business. Typically at most business conferences I have attended over the past several years, similar to the last ATM conference held this past September, such Acquirers were looking to engage parties, like you, inquiring ‘are you ready to retire, ready to exit, ready to sell’. If you are a business owner who has been around the block, and over the many years has successfully built a company that is generating a good/great net profit and has a good/great valuation, then I caution you to be as wise, as deliberate, and as smart as you were while walking around the block over all those years building/growing your business, when choosing a Third Path, especially Third Path C. The next Path you take, in particular Third Path C., is more important than the initial Path years ago you first took when you started your business. Consequently, I highly recommend you have your own team to counsel you, and you rely upon them to represent you, whomever they maybe, in order for you to make wise decisions. You should not just rely upon the acquiring party to guide you down whatever Path you choose to take.  In conclusion, if you are at the Third Path, which branches off into three different directions as I’ve described above, take your time, analyze where you want to go, and before making a decision and commitment to Path A. B. or C., seek sage advice and counsel to assist you traversing the Path you choose. Good Luck!

Most of the blogs I have written the past couple of years have addressed (i) establishing business entities, (ii) analyzing agreements, (iii) discussing contract terms, (iv) the value of establishing a contract database of your business’ agreements for data mining, (v) focusing on EMV shifting liability, (vi) risk mitigation, (vii) identifying business’ assets, (viii) recommending what a business should be doing to enhance its valuation for selling the business or its assets, (ix) recommending a process to follow when considering an acquisition of a business or its assets, (x) etc. The reason being is that almost all of my Clients are businesses covering a wide spectrum of sizes, organizations, products and services, with the primary emphasis for my practice in the ATM and electronic payments industry. As reach the end of another year (2018, which spans over four decades of practicing business law), I am conflicted. I am both saddened, but at the same time encouraged, by the manner in which businesses are conducting themselves in the market place, and not just the ATM and electronic payments Industry. I am old school and I readily admit to that. And although I refer to myself as a cowboy from Nevada (born in Nevada and after graduating from high school, I migrated to California for college and law school and then settled in Oregon, but all the while staying in the West), I would be laughed at by the guys I went to high school in Nevada, many of whom were cowboys. I mention this because 14 years ago, I bought a book entitled “Cowboy Ethics – What Wall Street Can Learn from the Code of the West.” In that book, the author re-stated the unwritten Code of West that he referred to as the “Ten Principles to Live By.” I bring this up, as prior to ever reading this book, from a young kid on, I was taught, mentored and learned to incorporate the Cowboy’s unwritten Code in how I lived my life. I applied this Code from the get-go after I graduated from law school in how I have conducted my business and law practice. Based on all my years of experience, I truly believe that the four cornerstones of most successful businesses are (1) Honesty, (2) Integrity, (3) Your Word was your Bond, and (4) Accountability, based on my application of the Code. For most of my career, including with the ATM and electronic payments Industry, the vast majority of my Clients and business relationships have been with people/organizations that exemplify these four virtues. However, in the past several years, as I have helped negotiate contracts, execute deals, consummate & implement transactions for my Clients, I have been dismayed, that not only one side, but sometimes both sides, including some of my Clients, modus operandi is just the opposite of these cornerstones. Unfortunately, and not surprisingly, there have been and will continue to be a higher probability that many of these contracts, deals, and transactions end up being breached/terminated. Typically, the parties end up in court, incurring major costs and expenses, destroying business relationships/partnerships, all the while blaming everyone and everything. Rarely do they ever consider that they may be as much as fault as the other side for causing these transaction failures due to how they conduct themselves. Over this same time frame, more so than in prior years, I have had to reluctantly terminate some clients, as I decided I could not continue to represent them in the manner they continued to choose to run their business. Not that I am a saint, but if you are going to talk-the-Code, you need to follow-the-Code, and Code #10 is “Know Where To Draw The Line,” so I drew a line. Fortunately, and the reason for this blog is to say that in the latter part of 2018, I have been encouraged, from small start-ups to larger, established companies, that I have had the opportunity to represent, I have encountered new “people” (businesses), as well as ones I have met on the other side of the table, who are either building or operating their respective businesses with honesty and integrity, they do what they say they are going to, and are accountable for what they do, even when they have made a mistake and are wrong. As I stated above, almost all of my Clients are businesses providing a product or services, primarily in the ATM and electronic payments Industry. I am proud to have been associated with this Industry since 1998 and look forward to many more years of association. However, we are all now in an age and an era of more and more federal and state regulations to protect consumers from unsavory businesses, increasing litigation, as well as the general public’s perceived negativism/pessimism of businesses generally being greedy/dishonest. So, going into 2019, I recommend that we all need to look at our “hold” card and ask ourselves: What do I stand for? What does my business stand for? How do I, how does my business operate? Do I want to be respected? Do I want my business to be viewed favorably? Do I want my business to be successful, but doing so by contributing and building morally and ethically?  And, if you are interested in the Cowboy unwritten Code or Ten Principles To Live By, they are as follows: Live Each Day With Courage. Take Pride In Your Work. Always Finish What You Start. Do What Has To Be Done. Be Tough, But Fair. When You Make A Promise, Keep It. Ride For The Brand. Talk Less And Say More. Remember That Some Things Aren’t For Sale. Know Where To Draw The Line.

The board of directors of ATMIA (the ATM Industry Association) met in conjunction with the group’s annual conference last week in Las Vegas and elected a new executive committee. The five-person committee will serve a three-year term, according to an official announcement. ATMIA is a non-profit trade association representing more than 10,700 members from over 650 companies in 67 countries. The membership includes financial institutions, independent ATM deployers, equipment manufacturers, processors “and a plethora of ATM service and value-added solution providers,” as described in an official press statement. Here are the members of the new ATMIA executive committee: President—John J. Leehy III, Payment Alliance International Inc., a privately-held ATM provider, based in Louisville, Ken. Deputy President—Jeff Matthews, Grant Victor Companies, an ATM service and solutions provider based in Kaysville, Utah Chairman—Peter Kulik, Citibank Finance Officer—Sandra Hartfield-Papie, Monex Financial Services, a global supplier of dynamic currency conversion and other services, headquartered in Ireland CEO—Michael Lee, ATMIA. Lee is based in South Africa New committee heads Three ATMIA U.S. committee groups also announced the election of new co-chairs last week. Serving terms of two years, those new co-chairs are: U.S. Regional Board—Elizabeth Bohlen, Evolve Bank & Trust, West Memphis, Ark.; Donna Embry, Payment Alliance International U.S. Government Relations Committee—Jack Ford, Jack Milford Ford Law; Brad Moody, Lowers Risk Group Independent ATM Deployers Committee—Jeff Hayes, Edge One; Jason Zubik, Elan Financial Services Founded in 1997, ATMIA has active chapters in the United States, Canada, Europe, Latin America, Asia-Pacific, Asia, Africa, India, and the Middle East.